Market Asymmetries and Investments in Next Generation Access Networks

This paper investigates firms’ incentives to innovate in Next Generation Access Networks. The market is initially asymmetric because one firm owns an "old" technology. This operator or its competitor may invest in a new access network. We focus on regulation of the old technology and show that a higher regulated access fee for the old technology leads to lower incentives to invest for the firm owning the old access network, while its competitor has stronger incentives to invest. We extend the analysis to privately negotiated access contracts for and access regulation of the new technology.